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'Offshore' has official dictionary meaning. It is used to mean 'outside the control of highly-taxed nations’ or “tax haven” countries which simply reflects the most low-tax islands whereby many had made their living from tourism, water sports or agricultural products. The low-tax (offshore) jurisdictions had grown in the early 20th century in response to high tax rates in the developed countries. It is estimated now that more than half of the world's money is in these low-tax jurisdictions. There are 70 self-declared IOFCs (International Offshore Financial Centres) already, and many other countries that would be joining them if there shall be businesses.
At the close end of the 20th century, it seemed that the large and rich nations did not have any desire to influence 'offshore' jurisdictions as they had their own tax breaks and incentives for particular industries or specific location. The citizens of the rich countries made plentiful use of 'offshore'. The OECD created the 'harmful tax competition', and the EU complained about 'unfair tax practices' without looking at how to make their local countries’ tax system more hospitable to foreign investors and more conducive to economic growth.
The EU, the OECD and a US Democratic administration joined forces to attack 'offshore' in 21st century resulting outstripped performance of the low-tax jurisdictions. Commencing from 1999, there was global concerns about money-laundering. The horror of 911 and the excuse of attacking terrorism had accentuated the financing control from US government. Fears about the leakage of tax revenues of EU countries gave the rich countries an opportunity to attack these 'offshore' countries asking for ‘transparency’ leading to IOFCs’ initial resistance to the underlying agenda of 'tax harmonisation', meaning that the domestic and international (non-resident) regimes should be 'harmonized' at a tax rate somewhere between the pre-existing rates. Without improving their complicated tax system, the government of these high-tax countries had started to limit the behavior of their own citizens offshore. You can see that the US government had penalized UBS Bank in Switzerland for not disclosing the list of its US clients. Perversely, the chaotic enforcement to the low-tax jurisdictions led to better regulatory structures and more effective competition among the jurisdictions. Some jurisdictions simply abandoned corporate taxation altogether. The growth rates for the low-tax jurisdictions in the first decade of the 21st century had far outperformed than the high-tax countries at excessive rates.
Many IOFCs are most useful in relation to a particular high-tax country. eg The Isle of Man which is offshore the UK. Others have specialized in particular business sectors. Please refer to the use of offshore by different businesses.
The development of Internet bypasses the traditional taxation measurement among government. The evolution of internet had created difficulties for tax authorities to enforce full assessment of an individual country as it made impossible supplies now possible without physical location boundaries. This is not a problem that can be solved by individual country, or even by groups of countries.
The high-tax nations made 'offshore' mystique to fool their behavior to track down and collect every last dollar from their citizens. For those who have never been part of it, offshore may seem synonymous with 'terrorism' or 'money-laundering' as stirred by the ‘moral’ majority of high-tax nations who misleadingly made the word naughty. Wrongly, many IOFCs (International Offshore Financial Centres) use both English legal systems and the English language; and there are plenty of experienced and reputable advisers to make ‘offshore’ more accessible and understandable for beginners through the early stages of using a low-tax jurisdiction, whether in terms of trading, investing, or in terms of living there.
If you want to know more, please do not hesitate to contact us:
Whatsapp : (852) 6499 4686 Phone : (852) 2186 6936 Email : info@intershores.hk
Disclaimer: Whilst reasonable care has been taken in provision of information above, it does not constitute legal or other professional advice. INTERSHORES does not accept any responsibility, legal or otherwise, for any error omission and accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, readers are advised to take appropriate professional advice before committing themselves to any involvement in jurisdictions, vehicles or practice.
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